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What general rules, requirements and procedures govern the conclusion of (re)insurance contracts in your jurisdiction?
Insurance contracts are governed by:
- general rules regulating the conclusion and execution of contracts and those specifically referred to insurance contracts (life and non-life insurance), provided by the Civil Code;
- the Insurance Code (Legislative Decree 209/2005) and regulations issued by insurance market regulator IVASS, which provide:
- specific rules regarding each type of insurance contract or specific aspects;
- transparency and disclosure requirements to be met by the insurer vis-à-vis potential policyholders in the pre-contractual phase; and
- post-sale requirements;
- specific provisions under the Consumer Code and IVASS regulations for the conclusion of insurance policies by means of distance modalities. The former also provide the general rules on unfair terms; and
- the Consolidated Financial Act and the implementing regulation issued by securities market regulator CONSOB regarding the pre-contractual requirements to be met by insurers when selling insurance investment products (unit and index-linked life insurance policies, with profit policies and capitalisation products).
There are no specific provisions governing reinsurance contracts under Italian law apart from the general rules on contracts and a few dedicated provisions in the Civil Code.
Are (re)insurance contracts subject to any mandatory/prohibited provisions?
Yes, there are some mandatory/prohibited provisions governing insurance contracts.
The Civil Code provides general mandatory provisions applicable to all contracts regarding the modalities for the conclusion of the contract, its form, the capacity of the parties and what determinates the contract’s nullity or unenforceability.
The Civil Code also provides some specific mandatory rules for insurance contracts (eg, the contract must be in writing for evidence purposes), some of which can be derogated if they benefit the policyholder/insured, while the Insurance Code provides mandatory rules in relation to different aspects regarding specific insurance contracts. .
Among others, insurance contracts cannot cover:
- events caused by fraud or gross negligence of the insured;
- administrative fines; and
- the risk of temporary driving disqualification or suspension of a driving licence.
The Insurance Code provides the nullity of insurance contracts concluded with an unauthorised insurance undertaking or with an insurance undertaking prevented from concluding new business.
Other general mandatory provisions are set out in relation to motor car insurance policies.
Under the mandatory drafting criteria provided by the Italian Insurance Code, insurance contract must be drawn up in a clear and exhaustive manner, and the clauses laying down forfeitures, nullity, limitations of covers or costs must be highlighted.
Can any terms be implied into (re)insurance contracts (eg, a duty of good faith)?
Yes, all the general principles set out by the Civil Code in relation to contracts apply to insurance and reinsurance contracts too.
The Civil Code provides that the duty of good faith is a general principle governing all phases of the insurance contractual relationship. Other principles include the duty of information and the duty of correctness and protection of the weaker of the contracting parties and consumers.
A specific drafting regime is set out for contractual clauses laying down advantages or more favourable clauses for the insurer (eg, limitation of liability, arbitration clauses) that – in contracts governed by general conditions, such as insurance contracts – must be specifically approved in writing.
What standard or common contractual terms are in use?
Italian law provides for the use of standard contractual clauses for certain insurance sectors, mostly with respect to mandatory insurance policies such as those for motor liability or professional liability insurance. Other provisions that impose specific contractual terms are included in the Civil Code (eg, duration of non-life insurance contracts, obligation to report claims), in the Insurance Code (eg, governing law for life and non-life insurance contracts, right of withdrawal) and IVASS regulations (eg, existence of a demographic risk cover in life insurance policies, clauses regarding the modalities for managing complaints received from policyholders).
What is the state of development in your jurisdiction with regard to the use of ‘smart’ contracts (ie, blockchain based) for (re)insurance purposes? Are any other types of financial technology commonly used in the conclusion of (re)insurance contracts?
Insurance smart contracts are not yet available in Italy.
However, insurance undertakings and distributors launched several initiatives in 2017 to develop the insurtech sector, resulting in the creation of a number of start-up companies.
IVASS and the Italian Association of Insurance Companies are monitoring this sector.
What rules and procedures govern breach of contract (for both (re)insurer and insured)?
The Civil Code provides general rules governing breach of contract. These entail the termination of the contract and the right to obtain a monetary compensation for any party suffering any damage.
In addition, the Civil Code provides a regime governing the breach of the following specific provisions:
- In case of misrepresentations or failures to disclose relevant information by the insured, the insurer can withdraw from the insurance contract;
- In case of misrepresentations or failures to disclose relevant information by the insured, the insurer can request the annulment of the contract if the insured acted fraudulently or with gross negligence;
- In case the insured does not pay the premiums, the insurance cover is suspended until payments are made; and
- For non-life insurance contracts, the voluntary breach of either the obligation to notify the insurer of the occurrence of an insured event, or of the obligation to avoid or mitigate the damages results in the loss of indemnity.
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